GDS International Raising $1B in Equity to Fund 1GW Data Centre Expansion

The international unit of Shanghai-based GDS Holdings has signed agreements to raise $1 billion in equity to help fund the development of up to 1 gigawatt of data centre capacity.

The Series B funding round for GDS International is supported largely by new US investors, led by Manhattan-based Coatue Management and with substantial participation by Boston’s Baupost Group, GDS said Tuesday in a release. GDS International, also known as DigitalLand, oversees operations in Hong Kong, Malaysia, Indonesia, Singapore and Japan.

Post-closing, GDS Holdings will own 37.6 percent of the equity interest in GDS International in the form of ordinary shares, with the stake valued at $1.3 billion based on the Series B subscription price. GDS will no longer consolidate GDS International for accounting purposes and will lose the right to appoint a majority of directors to the GDS International board.

“The Series B equity issue benchmarks significant incremental value creation for our shareholders,” said William Huang, chairman and CEO of GDS Holdings and chairman of GDS International. “We look forward to further achievements by our international business as we take it to the next level.”

Venture Capital Boost

The latest fundraise follows a Series A round earlier this year in which GDS International garnered $672 million in fresh cash from the sale of convertible preferred shares to investors including Chinese private equity major Hillhouse and its real assets arm Rava Partners, as well as Boyu, Princeville Capital and Tekne Capital. That funding round had originally targeted $587 million before being upsized to meet investor demand.

GDS International’s ex-China buildout has seen the developer explore new markets in and around the Singapore-Johor-Batam cluster, which continues to attract regional and global hyperscale demand.

“We see tremendous opportunities for growth in these markets as well as in other new markets which we are currently evaluating,” Huang said.

Mingtiandi reported earlier this month on GDS International’s acquisition of a western Singapore warehouse from CapitaLand Ascendas REIT for S$112.8 million ($86.4 million). The news came just weeks after the company took over the lease of a Goodman-built data centre at a converted factory site in Hong Kong’s Tsuen Wan West area.

Series B lead Coatue Management, founded by venture capitalist Philippe Laffont, has invested more than $27 billion in tech startups including ByteDance, Reddit, Spotify and Uber.

“Data centres are mission critical infrastructure to support the future of AI and cloud,” Laffont said. “We have been very impressed by the management team, and its capabilities to execute and expand the footprint of the business in such a short period of time. We are excited to work alongside management to expand GDSI into a global leading data centre platform.”

Room to Grow

The DigitalLand platform’s existing revenue-generating assets consist of an 18.2-megawatt facility in Hong Kong and the first phase of a 158.7MW campus in the southern Malaysian state of Johor, both of which are self-developed and owned.

The company also provides services for third-party data centres in Singapore, including assets owned by STT GDC.

In March, GDS introduced Jamie Khoo as the chief executive of DigitalLand. Khoo joined the GDS senior management team in 2014 as deputy chief financial officer and has served as the chief operating officer of the company since January 2019.

Her appointment as DigitalLand CEO took effect upon closing of the Series A capital raise.